EUROPEAN CHARTER FOR SMALL ENTERPRISES

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1 EUROPEAN CHARTER FOR SMALL ENTERPRISES Small enterprises are the backbone of the European economy. They are a key source of jobs and a breeding ground for business ideas. Europe s efforts to usher in the new economy will succeed only if small business is brought to the top of the agenda. Small enterprises are the most sensitive of all to changes in the business environment. They are the first to suffer if weighed down with excessive bureaucracy. And they are the first to flourish from initiatives to cut red tape and reward success. At Lisbon we set the goal for the European Union to become the most competitive and dynamic knowledge-based economy in the world, capable of sustainable economic growth, more and better jobs and greater social cohesion. Small enterprises must be considered as a main driver for innovation, employment as well as social and local integration in Europe. The best possible environment for small business and entrepreneurship needs therefore to be created. Principles In urging for this, we: Acknowledge the dynamic capacities of small enterprises in answering to new market needs and in providing jobs; Stress the importance of small enterprises in fostering social and regional development, while behaving as examples of initiative and commitment; Recognise entrepreneurship as a valuable and productive life skill, at all levels of responsibility; Applaud successful enterprise, which deserves to be fairly rewarded; Consider that some failure is concomitant with responsible initiative and risk-taking and must be mainly envisaged as a learning opportunity; Recognise the values of knowledge, commitment and flexibility in the new economy. The situation of small business in the European Union can be improved by action to stimulate entrepreneurship, to evaluate existing measures, and when necessary, to make them small-business-friendly, and to ensure that policy-makers take due consideration of small business needs. To this end, we pledge ourselves to: Strengthen the spirit of innovation and entrepreneurship which enables European business to face the challenges ahead; Achieve a regulatory, fiscal and administrative framework conducive to entrepreneurial activity and improve the status of entrepreneurs; Ensure access to markets on the basis of the least burdensome requirements that are consistent with overriding public policy objectives; Facilitate access to the best research and technology; Improve access to finance throughout the entire life-cycle of an enterprise;

2 Improve our performance continuously, so that the EU will offer the best environment for small business in the world; Listen to the voice of small business; Promote top-class small business support. Lines for action By endorsing this Charter, we commit ourselves to work along the following lines for action, taking due consideration of small business needs. 1. Education and training for entrepreneurship Europe will nurture entrepreneurial spirit and new skills from an earlier age. General knowledge about business and entrepreneurship needs to be taught at all school levels. Specific business-related modules should be made an essential ingredient of education schemes at secondary level and at colleges and universities. We will encourage and promote youngsters entrepreneurial endeavours, and develop appropriate training schemes for managers in small enterprises. 2. Cheaper and faster start-up The costs of companies' start-up should evolve towards the most competitive in the world. Countries with the longest delays and most burdensome procedures for approving new companies should be encouraged to catch up with the fastest. Online access for registration should be increased. 3. Better legislation and regulation National bankruptcy laws should be assessed in the light of good practice. The learning from benchmarking exercises should lead us to the improvement of current practices in the EU. New regulations at national and Community level should be screened to assess their impact on small enterprises and entrepreneurs. Wherever possible, national and EC rules should be simplified. Governments should adopt user-friendly administrative documents. Small enterprises could be exempted from certain regulatory obligations. In this context, the Commission could simplify competition legislation to reduce the burden of compliance for small business.

3 4. Availability of skills We shall endeavour to ensure that training institutions, complemented by in-house training schemes, deliver an adequate supply of skills adapted to the needs of small business, and provide lifetime training and consultancy. 5. Improving online access Public authorities should be urged to increase their electronic communication with the small business sector. Thus, companies will be able to receive advice, make applications, file tax returns or obtain simple information online, therefore faster and more cheaply. The Commission must lead by example in this area. 6. More out of the Single Market Small businesses are feeling the benefits from the reforms underway of Europe s economy. The Commission and Member States must therefore pursue the reforms underway aiming at the completion in the Union of a true internal market, user-friendly for small business, in critical areas for development of small businesses including electronic commerce, telecommunications, utilities, public procurement and cross-border payment systems. At the same time, European and national competition rules should be vigorously applied to make sure that small businesses have every chance to enter new markets and compete on fair terms. 7. Taxation and financial matters Tax systems should be adapted to reward success, encourage start-ups, favour small business expansion and job creation, and facilitate the creation and the succession in small enterprises. Member States should apply best practice to taxation and to personal performance incentives. Entrepreneurs need finance to translate ambitions into reality. In order to improve the access of small enterprises to financial services, we will: Identify and remove barriers to the creation of a pan-european capital market and to the implementation of the Financial Services Action Plan and the Risk Capital Action Plan; Improve the relationship between the banking system and small enterprises by creating appropriate access conditions to credit and to venture capital; Improve the access to the structural funds and welcome initiatives by the European Investment Bank to increase funding available to start-ups and high-technology enterprises, including equity instruments.

4 8. Strengthen the technological capacity of small enterprises We will strengthen existing programmes aimed at promoting technology dissemination towards small enterprises as well as the capacity of small business to identify, select and adapt technologies. We will foster technology co-operation and sharing among different company sizes and particularly between European small enterprises, develop more effective research programmes focussed on the commercial application of knowledge and technology, and develop and adapt quality and certification systems to small enterprises. It is important to ensure that a Community patent is available and easily accessible to small enterprises. We will foster the involvement of small enterprises in inter-firm co-operation, at local, national, European and international levels as well as the co-operation between small enterprises and higher education and research institutions. Actions at national and regional levels aimed at developing inter-firm clusters and networks should therefore be supported, pan-european co-operation between small enterprises using information technologies enhanced, best practice in co-operative agreements spread, and small enterprises co-operation supported to improve their capabilities to enter pan-european markets and to extend their activities in third country markets. 9. Successful e-business models and top-class small business support The Commission and Member States should encourage small enterprises to apply best practice and adopt successful business models that enable them to truly flourish in the new economy. We will co-ordinate Member States and EU activity to create information and business support systems, networks and services which are easy to access and understand, and relevant to the needs of business; ensure EU-wide access to guidance and support from mentors and business angels, including through websites, and exploit the European Observatory on SMEs. 10. Develop stronger, more effective representation of small enterprises interests at Union and national level We will complete a review of how the interests of small businesses are represented at EU and national level, including through the social dialogue. We commit ourselves to progress towards these goals using the open method of coordination of national enterprise policies. The Multiannual Programme for Enterprise and Entrepreneurship, the Cardiff process on economic reforms, the Luxembourg process on employment policies and other Community programs and initiatives will be used to this end. We will monitor and evaluate progress annually on the basis of a Commission report on the relevant issues at the Spring Summits.

5 We will use effective indicators to assess progress over time and in relation to the best in the world to reinforce our learning, searching for better practice in all fields that affect small business to continuously improve our performance.

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